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Blockchain in the Public Sector

Written by Chris Smith and Meaghan Gregory on January 30, 2018

With a rate of growth in excess of 1,300% during 2017, the massive surge in the value of the cryptocurrency, Bitcoin, (see this article) has justifiably garnered a great deal of attention and press coverage. However, rather than the Bitcoin currency itself, it is the underlying technology, known as blockchain, that has the greatest potential to change our world.

An anonymous person or group conceptualized blockchain in 2008 as the technology behind Bitcoin. In 2013 and 2014, public discourse started to differentiate blockchain and Bitcoin as various start-up companies began to recognize the great potential of blockchain to improve business processes. Blockchain became a buzzword of 2017 in its own right, with numerous entities, like Wal-Mart, United Parcel Service, United Nations’ World Food Programme, NASDAQ, the State of Delaware and many others, conducting blockchain implementations or initiatives. We will certainly see expanded implementation of blockchain in 2018 and the years to come.

In short, blockchain is a shared ledger system that can be used to track assets and store and secure virtually any type of information. The technology is comprised of a digital ledger that collects and stores encrypted data on multiple computers, utilizing either public or private networks. The data that is entered into this technology at a particular time is considered a “block.” Once one block of information has been recorded, a new block begins. Each block of data is recorded in chronological order and cannot be changed once completed. Any alteration of a block is virtually impossible without detection. The key benefits of the technology are security and the ability to make data transfer simpler and easier between parties. When combined with other emerging technologies, such as smart contracts and biometric recognition, the possibilities for innovation seem endless.

Conceptually, without considering examples of how organizations have or might implement this technology in the future, it is difficult to envision how blockchain could be so revolutionary that some have compared it to the creation of the Internet. Here are a few examples of blockchain implementation in the public sector:

United Nations’ World Food Programme

In 2017, the United Nations’ World Food Programme (WFP) used a secure platform called Building Blocks to operate a supermarket in the Azraq refugee camp in Jordan. More than 10,000 Syrian refugees were able to redeem their WFP-provided assistance by utilizing retinal scanners, with the transaction information being immediately and securely shared between the retailer and the WFP, eliminating the need for inefficient reconciliation, billing and manual review functions in the reimbursement process. With expanded implementation of the technology, WFP is expecting to save millions of dollars through the reduction of intermediary costs, fraud and abuse, data mismanagement and inefficiencies. Read more about Building Blocks here.

Dubai Blockchain Strategy

In October 2016, Dubai announced a strategic plan to have all government documents secured on a blockchain ledger by 2020, which is expected to improve economic productivity by approximately 25 million hours each year. Visa applications, bill payments and license renewals will be transacted digitally under the strategy, potentially eliminating 100 million documents each year and reducing inefficiencies experienced by local businesses, citizens and visitors to the country. You can find out more about Dubai’s strategy here.

State of Delaware

In August 2017, the State of Delaware, where over one million corporations are incorporated, passed a law to allow corporations to maintain shareholder lists and other corporate documentation on a blockchain ledger. This will allow users to execute trades, votes, governance processes and issue shares without relying on third-party intermediaries. With blockchain, one database does not have to update another, as is typical on non-digitized databases, because all data is maintained on one ledger. More information can be found on the State’s website.

Bitgive

Bitgive, a nonprofit based in northern California, provides a customized blockchain donation platform which will allow donors to track donations to nonprofits on a public platform in real time to see how funds are spent, ensure they reach their final destination and track the results generated from their contributions. Due to the resulting transparency, donors are likely to feel more connected to the mission of the organization, increasing and improving the level of trust between the donor and the organization itself. As more and more nonprofits adopt similar platforms, a higher level of engagement by donors will no doubt provide great benefits for the philanthropic world. Read more here.

Overall, blockchain technology is expected to impact organizations in virtually every industry in the coming years, and public sector organizations will not be an exception. Change can be intimidating. Careers will be impacted by role changes, the creation of new opportunities and the elimination of some positions. As we adapt to the coming changes, blockchain will likely provide a huge number of benefits and opportunities, many of which we cannot even imagine today.